Brooks v. Northglen Ass'n

• Decision Date: 18 April 2002
• Docket Number: No. 06-01-00028-CV.,06-01-00028-CV.
• Citation: 76 S.W.3d 162
• Parties: Geneva BROOKS d/b/a Committee to Remove the Board, Diane Higgins, Pauline White, Don Yust, Virginia Yust, Aurelio Ojada, Anthony McBride, and Susan Auclair, Appellants, v. NORTHGLEN ASSOCIATION, Appellee.
• Court: Texas Court of Appeals

76 S.W.3d 162

Geneva BROOKS d/b/a Committee to Remove the Board, Diane Higgins, Pauline White, Don Yust, Virginia Yust, Aurelio Ojada, Anthony McBride, and Susan Auclair, Appellants, v. NORTHGLEN ASSOCIATION, Appellee.

No. 06-01-00028-CV.

Court of Appeals of Texas, Texarkana.

Submitted February 27, 2002.

Decided April 18, 2002.

David A. Kahne, Law Office of David A. Kahne, Robin R. Willis, Houston, for appellant.

Sue Auclair, Houston, Pro Se.

Marc D. Markel, John Bradley Mitchell, Clayton R. Hearn, Roberts, Markel & Folger, LLP, James H. Leeland, Hoover, Bax & Slovacek, LLP, Houston, for appellee.

Before CORNELIUS, C.J., GRANT and ROSS, JJ.

OPINION

Opinion by Chief Justice CORNELIUS.

Geneva Brooks and other lot owners (lot owners) appeal from the trial court's summary judgment granting declaratory relief in favor of Northglen Association, a homeowners' association (Northglen). The case as it stands on appeal concerns the authority of Northglen to levy and accumulate assessments against the lot owners and increase the amount of those assessments for maintenance purposes, and the authority of Northglen to foreclose liens securing those assessments against the homesteads of the lot owners who default in payment of the assessments.

This suit was originally commenced by Northglen, a homeowners' association for the Northglen residential subdivision in Harris County. Northglen sought injunctive and declaratory relief against lot owners Geneva Brooks, Diane Higgins, Pauline White, Don Yust, Virginia Yust, Aurelio Ojeda, Anthony McBride, and Susan Auclair, because of their efforts to remove Northglen's board of directors. These efforts were allegedly directed against the directors because the board had instituted legal action against some of the lot owners for violating the restrictive covenants applicable to the subdivision. The suit accused the lot owners of spreading false rumors about the directors and interfering with the board's operations. The lot owners counterclaimed against Northglen, adding the individual directors as parties. The lot owners sought in the counterclaim declaratory relief pertaining to the assessment and collection of subdivision maintenance fees. The parties have dismissed all causes of action against each other except those related to the validity of the subdivision maintenance fees.

The trial court held that the maintenance fees for Northglen Sections one, two, and three could be raised without limitation as determined by the subdivision board. The lot owners challenge this ruling in Issue Two. The trial court held that as to Sections four, five, and six, the amount of increases in maintenance fees that could legally be imposed were limited by the deed restrictions, but that Chapter 204 of the Texas Property Code permits Northglen to accumulate all increases authorized but not assessed in prior years and assess the cumulative total against the lot owners. This ruling is challenged in Issue One and Issue Three. The lot owners also challenge the trial court's ruling that the board may assess fees for late payments in addition to any penalties authorized by the restrictions. Issue Four challenges whether any additional liens authorized by Chapter 204 of the Texas Property Code may be foreclosed against a homestead interest. Issue Five challenges the award of attorney's fees to the lot owners if the case is reversed.

ISSUE ONE

The trial court held that Northglen may increase the assessments for Sections four, five, and six, without a vote of the membership, to $120.00 per lot per year, plus the increase in the consumer price index per year or ten percent more than the prior year's assessment, whichever is greater. The court further held that the board could accumulate the authorized but unassessed increases as allowed by Tex. Prop.Code Ann. § 204.010(a)(16) (Vernon Supp.2002).

The lot owners agree that the court properly interpreted the restrictive covenants for Sections four, five, and six as to the allowable increases, but disagree with the court's determination that Northglen's board had authority to accumulate and assess all increases under the authority of the statute. The lot owners argue that the court improperly interpreted the statute, or in the alternative, the statutory provision is unconstitutional as impairing the obligation of contracts under U.S. Const. art. I, § 10 and Tex. Const. art. I, § 16.

The pertinent provision of the restrictive covenants for Section four reads as follows:

Until January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment shall not exceed Ten ($10.00) Dollars per month, or One Hundred Twenty ($120.00) Dollars per annum, per Lot: provided, however, that from and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the Board of Directors of the Association shall be empowered to increase said rate as the needs of the Association require; except that if any such increase shall cause the annual assessment to be greater than the aforesaid $120.00 plus the rise, if any, of the Consumer Price Index as published by the United States Department of Labor for the preceding month of July; or more than One Hundred Ten (110%) percent of the amount assessed in the preceding calendar year, whichever is greater, then shall such an increase require the vote of two-thirds (2/3) of each class of members of the Association who are voting in person or by proxy, at a meeting duly called for that purpose.

The provisions for Sections five and six are substantially the same. The lot owners contend that if the assessments are accumulated under Tex. Prop.Code Ann. § 204.010 (Vernon Supp.2002), it would allow an increase of at least ten percent for every year the deed restrictions were in force (sixteen years) with interest compounded. They contend this would permit the annual assessment for these sections to increase from $120.00 per lot per year to more than $550.00.

Tex. Prop.Code Ann. § 204.010 provides, in pertinent part, as follows:

(a) Unless otherwise provided by the restrictions or the association's articles of incorporation or bylaws, the property owners' association, acting through its board of directors or trustees may:

....

(16) if the restrictions allow for an annual increase in the maximum regular assessment without a vote of the membership, assess the increase annually or accumulate and assess the increase after a number of years.

Reading the plain language of the statute and the pertinent portions of the restrictive covenants for Sections four, five, and six, we agree with the trial court's determination. The restrictions for these sections do not expressly "provide otherwise" to the statutory authorization, so accumulation of the previously authorized but unassessed annual increases is allowed. The phrase "unless otherwise provided" or similar language, when used in a statute, usually refers to other statutes pertaining to the same subject matter. Here we construe the language to refer to other statutes on the same subject matter, or to agreements or restrictions applicable to the subdivision. We can find no instance where silence on the subject has been construed as "otherwise providing." The lot owners argue that the original provision allowing for the assessments and the annual increases in itself is an exclusive method of making the assessments and increases, and so it effectively "provides otherwise" to the statutory provision authorizing accumulation. We disagree. The deed restrictions in no way either authorize or prohibit accumulation. They are completely silent on that subject. As we have already noted, we do not believe that silence on the subject of accumulation may reasonably be construed to be a positive or express provision that accumulation is not permitted. Indeed, it seems that if the Legislature had thought that the original assessment provision itself denied the authority to accumulate, it would not have used the phrase "unless otherwise provided" in the statute authorizing accumulation. That the Legislature felt it necessary to use these words indicates, we think, that it did not believe that the bare provision for annual assessments necessarily prohibited accumulation.

The lot owners argue that if Chapter 204 of the Texas Property Code gives homeowners' associations authority to accumulate and assess maintenance fees where the original deed restrictions do not, the statute would be unconstitutional as a retroactive law and because it impairs the obligation of contracts in violation of Article I, § 10 of the United States Constitution and Article I, § 16 of the Texas Constitution.

Article I, § 10 of the United States Constitution provides:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Article I, § 16 of the Texas Constitution provides:

No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts shall be made.

Although both the United States and Texas Constitutions prohibit laws that impair the obligation of contracts, it is now well settled that state police power regulations dealing with physical things such as land or natural resources are valid even if they have incidental effects on pre-existing contracts, if those laws or regulations are exercised in the interest of the public welfare. Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618 (Tex.1996). As stated by the United States Supreme Court in Henderson v. Thompson, 300 U.S. 258, 57 S.Ct. 447, 81 L.Ed. 632 (1937), the Texas Constitution has never been held to invalidate a police power statute dealing...